A new chart from the CFTC’s CME Ether Leveraged Net Total Combined report signals a critical shift in Ethereum’s institutional positioning. Leveraged positions on Ethereum have dropped significantly since mid-2024. This steep decline in Ethereum Shorts reveals that major institutions are no longer betting heavily against ETH. The trend aligns closely with Ethereum’s price stabilizing at $3,750.30 as of July 26, 2025, according to CoinMarketCap.
This move marks a departure from the heavy short interest seen earlier this year. In February 2025, a Reddit thread on r/ethtrader highlighted what was then the largest recorded Ethereum short position. That earlier sentiment now appears to have reversed. The aggressive unwinding of shorts indicates a broader change in institutional outlook, even if Ethereum has yet to break new all-time highs after its ETF approval.
Short Squeeze Risks Return to Spotlight
The sharp decline in Ethereum Shorts raises the possibility of a short squeeze if prices push higher. Back in February, traders on Reddit speculated that any upward move in ETH could ignite a squeeze similar to past crypto market rallies. Although such predictions remain unverified by academic research, history offers several parallels. Crypto investors have often witnessed sudden price surges when bearish leveraged positions are unwound en masse. With Ethereum Shorts now falling at a notable pace, the current market dynamic mirrors those conditions.
This setup could put pressure on remaining short-sellers, especially if ETH breaks above resistance in the coming weeks. Unlike the speculative Reddit talk earlier this year, the latest data now shows real action. Institutions are already exiting their leveraged positions, not just talking about it. The fact that this shift is occurring without a new all-time high signals quiet but growing confidence in Ethereum’s medium-term potential.
Institutional Confidence Challenges Bearish Narrative
Signs of growing institutional confidence aren’t limited to Ethereum. According to Cointelegraph’s July report, 35 publicly traded companies now hold over 1,000 BTC each. This growing trend shows that institutional players remain engaged across the crypto market, not just with Bitcoin but with Ethereum as well. The reduced interest in leveraged shorts further reflects this sentiment. Institutional investors seem to have shrugged off a lot of short-term downside risk, becoming less worried about having positions through price consolidation;
Ethereum has maintained its price and is steady relative to price volatility nearby the $3,750 mark, in the broader context of the crypto market, and even if ETH wasn’t able to hold new highs post-ETF, there are still long-term holders for ETH. The fading pressure from leveraged positions has made room for more stable capital to enter. The recent shift in derivatives data, backed by on-chain steadiness, paints a more balanced outlook for Ethereum’s path forward.
Market Dynamics Shift Amid ETF Aftermath
Ethereum’s failure to explode after its ETF approval raised doubts about its upside potential. However, the latest drop in Ethereum Shorts suggests the market is now recalibrating. Institutions seem to be adjusting to a post-ETF environment with more realistic expectations. Rather than riding on hype, these firms are unwinding bearish trades and preparing for steady market conditions. Leveraged positions falling sharply indicate reduced volatility pressure on Ethereum.
This is a welcome change for the crypto market, which has suffered from unstable trading behavior in the past months. Importantly, this trend supports Ethereum’s position as a maturing digital asset. Institutions shedding shorts and holding positions longer align with how they treat traditional commodities or stocks. Ethereum may not be in breakout mode yet, but the strategic shift by institutional players could shape its long-term price narrative. Ethereum’s leveraged landscape has changed dramatically in recent months. The sharp drop in Ethereum Shorts, as revealed by CFTC data, shows that institutional traders are moving away from bearish positions.
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